Amazon's dominance of the fledgling e-book market will be relatively short-lived. For while sales of digital books are growing, so too are the devices on which to read them. With Apple's iPad heading to market this spring and a rumored Google tablet some time after that, Amazon is going to have a tough time holding on to the 90 percent share of the e-book market it currently claims.
According to Credit Suisse analyst Spencer Wang, the retailer will likely see its e-book market share slip from 90 percent to 72 percent this year and to 35 percent by 2015.
"Near term, we suspect that the iPad and the new eBook agency pricing model, which requires that Amazon increase retail prices to be more consistent with Apple's pricing, will provide Kindle with the most market share headwind," Wang wrote. "Going forward, we can envision a scenario where Apple, Amazon, and Google eventually split the market. Therefore, we expect Amazon's share of eBooks business to fall from 90 percent currently to about 35 percent over the next five years."
That's a steep decline, but if Wang is right, it will be tempered a bit by a concomitant increase in sales as e-books become more mainstream. The analyst figures Amazon's e-book sales will rise to $775 million from $248 million over the next five years.